Let’s make super fair

The fastest-growing cohort of homeless people in Australia is older single women, a trend that shows no sign of slowing down. We must take steps now to improve women’s economic security in retirement, not just for those retiring now, but for future generations, too.

Making the system fairer for all low-income earners, be they men or women, will go a long way towards closing the gender gap in retirement savings.

That is why Women in Super launched the Make Super Fair campaign.

It is unacceptable that in 2017, despite 25 years of compulsory superannuation, women still retire with average account balances 47 per cent lower than men.

Telling women to take control of their finances or become more financially literate is not the solution. Nor is the outdated belief that a husband is an adequate retirement plan. Over half the female workforce earns less than $37,000 a year and one-third of women retire single.

Structural barriers

As the 2016 Senate Inquiry into Women’s Economic Security in Retirement found, the gender pay gap persists and is the biggest driver of the gender super gap.

The pay gap starts early. The latest Workplace Gender Equality Agency (WGEA) figures show female graduates earn 4 per cent less than their male peers and the gap widens as women progress up the career ladder.

Women are more likely to take career breaks to care for children and many mothers then return to work part-time, a decision made perhaps as a result of being paid less than their partners in the first place!

All this means women typically miss out on tens of thousands of dollars of compulsory employer contributions and compound interest over their lifetimes.

Leading businesses are increasingly offering all employees the ability to work flexibly, whatever the reason – whether to bring up a family, care for an elderly parent or sick partner, volunteer, or pursue further study. Still, for most of the workforce, quality, well-paid, flexible jobs are hard to find.

All talk, no action

The super gender gap has attracted much media, industry and government attention in recent years, yet as a nation, we have failed to act.

Structural inequity requires structural solutions. As a priority, we need increased government support for workers (women and men) on lower incomes and those whose earning capacity is affected by caring responsibilities.

In launching the Make Super Fair campaign, Women in Super hopes to build on our successful effort to save the Low Income Super Contribution (LISC), which was, in effect, retained in the 2017 federal budget as the Low Income Superannuation Tax Offset (LISTO).

LISTO rebates the extra tax low-income earners are charged on their compulsory super contributions, with the average payment coming to about $250 a year. To put this into context, Treasury spends $30 billion dollars a year delivering super tax concessions to high-income earners (mostly men) and just $1 billion on concessions to low-income earners (mostly women). This distribution of tax concessions seems neither fair, sustainable nor equitable.

The Make Super Fair campaign is advocating for:

No further delays to the scheduled superannuation guarantee (SG) increases.

The application of the SG to the government paid parental leave scheme.

The removal of the $450 monthly income threshold on SG contributions.

A requirement that government undertake and publish a gender impact statement for any changes to age pension or retirement income policy, in addition to the ongoing tracking by WGEA of the gender super gap.

All Australians have the right to a dignified retirement and superannuation is the key to delivering that. As an industry, we have the power to alter the narrative and accomplish meaningful change.

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Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.